The right selection of background music in your store can make the difference between keeping your customers comfortable and engaged or restless and bored.
Unfortunately, playing music for your customers is not as simple as loading the perfect playlist from your favorite music streaming service.
Many store owners in the retail industry wonder if they can play or share Spotify, iTunes, YouTube, or other music services on their premises, and the answer is complicated due to intellectual property law in the United States.
Can I Play Licensed Music In My Business?
Can I play clean music from Spotify at work? The simple answer to this is “no.” However, understanding licensing laws and streaming music for business can help you find a solution that is just as simple.
Spotify represents about 36 percent of the global music streaming market, with only a few major competitors, including YouTube, SoundCloud, Pandora, SiriusXM, and Apple Music. However, all these services are directed to individuals, with licenses allowing streaming music and/or video for personal use.
If you broadcast streaming music to your customers in your business, this is legally considered a live performance, and it requires a different type of business-specific license.
When licensed music is played in a commercial space, it is played with the intention of creating an experience for customers that is conducive to the interests of the business.
Happy customers make businesses more money, and music can make customers happy. Since you are financially benefiting from another’s creative work, that artist deserves some income for their intellectual property.
Published or recorded music is owned by someone through intellectual property rights. Copyright law also stipulates that when the music is played in certain public or global spaces, the copyright holders must be well compensated. This supersedes legal purchase of the song (either in a digital or CD copy) for individual use (a private performance) since part of the song’s retail cost goes to the artist and publisher.
Companies like Spotify make this very clear in their terms and conditions. Spotify’s website clarifies that a personal account does not allow the user to play songs in public spaces, like stores, clubs, restaurants, and bars.
Spotify for Business Can Help
Instead, a Spotify Business account works as a commercial license subscription. It gives users the legal coverage to stream and download internet-based music through the Spotify Business platform, and to play it to anyone within the business’s premises. This is one way that Spotify itself makes money.
While over 100 million people use the free version of the platform, the company receives payment from just 30 million people to unlock additional features. As a result, the company has been bleeding money because of how expensive its licensing agreements with record labels are. Collecting monthly fees from businesses helps to offset the exorbitant deals it has with the publishers of some of the biggest artists in the world.
Having a Spotify for Business account ensures that anybody who has a copyright claim to the music — the artists, the record label, or both — is fairly compensated every time their music is used in a professional setting. The Spotify for Business cost (also known as Soundtrack Your Brand) is $35.00 per month for the base plan. Other music streaming services, like Pandora with Pandora for Business, have their own business arrangement, and it works in much the same way.
Users with a Spotify business license pay a monthly flat fee to access and play songs, safe in the knowledge that the respective services have arrangements with the necessary performing rights organizations that disburse royalties to labels. Through the use of a Spotify for Business license, there will never be any accusation that a store is unlawfully playing licensed music.
Spotify & Soundtrack Your Brand in Partnership
Soundtrack Your Brand was founded in 2013 by Swedish developers who originally worked for Spotify, so the company’s core concept is very similar. This is why Spotify chose to partner with them to get access to Spotify’s huge library of music for commercial subscribers. This requires negotiating different licenses with performing rights organizations (PROs).
If you have a personal Spotify account, you are familiar with the basics of using Spotify for business. Access to this type of streaming interface will help your employees too, as they manage music playlists throughout the day.
The Role of PROs
Performing rights organizations are groups like the American Society of Composers, Authors and Publishers (ASCAP); SESAC (originally the Society of European Stage Authors and Composers); and Broadcast Music, Inc (BMI). These organizations represent the rights of songwriters and music publishers to publicly perform the copyrighted works they created.
This means that only people with the necessary copyright can play or perform those songs in public. Everyone else must purchase a license to do so.
Big distribution platforms like Spotify have their own next level arrangements with PROs, which simplifies things for business owners who want to stream music in their stores. Just having a Spotify Business account grants you access to the repertoire of songs covered by the respective PROs.
“Personal” and “noncommercial” prohibit the streaming music from being played in a work environment, especially if the intention of the music is to benefit the business.
Playing music in this environment constitutes a public performance, which is forbidden by both the user agreement with Spotify and respective streaming services, and federal copyright law.
Specifically, U.S. copyright law states that music can be considered to be “publicly performed” when the music is played in a location that is either open to the public or a location where “a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered.” An example of this is using free music streaming at school (non-educationally), which is a public place and therefore needs a commercial license.
The Terms of Using Licensed Music
Legally purchasing the music being played is not the same as legally owning that music, according to intellectual property law.
As The Guardian explains, a consumer simply buys the right to play the particular song per the terms set by the copyright holder. For individual consumers, those terms are almost exclusively for the song or album to be played in a private (or, at least, a nonpublic) setting. Attempting to use that same song in a public setting, like Spotify for retail stores or Spotify for hotels, is a violation of the terms of purchase, akin to using a rental car as a personal vehicle.
The public performance clause in the copyright law includes, but is not limited to, streaming music from digital sources, playing MP3 files from a music player, CDs, music videos on TV, and music played by a DJ.
If you listen to your own music on a break, away from customers, this does not constitute a public performance, so you do not need to worry about using your personal Spotify playlist. If you think these playlists are something your customers would enjoy, get Spotify for Business and you can transfer your personal playlists over and play them legally, to create a great atmosphere in your establishment.
Business to Consumer vs. Business
In general, services like Spotify, Apple Music, Amazon, iTunes, SoundCloud, Pandora, and Last.fm are music platforms for individual consumers (business to consumer). Typically, they are free or have a reasonably flat monthly fee, allowing users unlimited listening.
This can confuse users into thinking that they (the users) “own” the right to do whatever they want with the music they are getting. And users do have a lot of things they can do with that music. They can stream it in their car, play it at family gatherings, or listen to it at the gym or on the bus.
But playing music in a public business setting over multiple speakers, with the intention of creating a welcoming environment for the general public to spend their time, is the function of a business-to-business arrangement, and this needs the appropriate licensing.
Spotify and Pandora have the necessary deals with performing rights organizations, meaning that a business owner can simply pay an extra fee every month to have access to literally thousands of songs to play for customers. Additionally, this also protects the business from accusations of copyright infringement.
For services that do not have deals with PROs, a license can be obtained from one or all of them, which entails paying the PRO directly. There are also streaming services that are built exclusively for business use. This achieves much the same effect: legally playing music for customers in a place of business.
- Playing Spotify Music In Your Shop, Bar or Restaurant. Sonic Effect.
- Spotify Terms and Conditions of Use. (November 2016). Spotify.
- Spotify Now Has 100m Users, But Only Twice as Many Paid Customers as Apple Music. (June 2016). 9to5Mac.
- Spotify Has Spent $10 Billion on Music Royalties Since Its Creation and It's a Big Part of Why It’s Bleeding Money. (February 2018). Business Insider.
- You Might Need a License to Play Music in Your Small Business. (September 2011). National Federation of Independent Business.
- Chapter 1: Subject Matter and Scope of Copyright. U.S. Copyright Office.
- In Our Digital World You Don’t Own Stuff, You Just License It. (April 2013). The Guardian.
- Leading-Edge Law: Don't Open Pandora at Your Business. (March 2012). Richmond Times-Dispatch.
- Pandora Partners With DMX on Legal, Personalized Streaming Music for Businesses. (November 2011). Rolling Stone.
- Top 10 Things You Need to Know About Using Copyrighted Music on YouTube. (October 2016). Tubular Insights.
- Does “No Copyright Infringement Intended” Have Any Legal Significance? (July 2014). Pixsy.
- Learn About Copyright. SoundCloud.
- Tune Up Your Marketing: Using Spotify for Your Business. (October 2012). Social Media Today.